R W Harmon & Sons, Inc

National Labor Relations Board - Board Decisions

Jan 29, 1990

297 N.L.R.B. 562 (N.L.R.B. 1990)

562 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
R W Harmon & Sons, Inc and United Food and
Commercial Workers, Local Union 576 Pen
tioner Case 17-RC-9815
January 29, 1990
DECISION ON REVIEW AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND DEVANEY
On April 30, 1986, the Regional Director for
Region 17 issued a Decision and Direction of Elec
tion in this proceeding, in which he concluded that
the Board should assert jurisdiction over the Em
ployer In reaching his conclusion, the Regional
Director found that the Employer retained control
"over most terms and conditions of employment"
and was therefore capable of engaging in meaning-
ful collective bargaining with the representative of
its employees He further noted that although the
Employer had entered into a contract with the In-
dependence, Missouri School District (School Dis
tnct), a governmental entity exempt from the
Board s jurisdiction, that appeared to grant the
School District control 'of meaningful elements
underlying collective bargaining, that control was
uncertain because the contract was not then in
effect In accordance with Section 102 67 of the
Board's Rules and Regulations, the Employer filed
a timely request for review of the Regional Direc
tor's Decision On May 30, 1986, the Board grant
ed the Employer's request for review On June 30,
1986, the Board issued an Order remanding this
proceeding to the Regional Director for further
consideration in light of the decisions in Res Care
Inc , 280 NLRB 670 (1986), and Long Stretch Youth
Home, 280 NLRB 678 (1986), with instructions to
reopen the record if necessary, and to issue a Sup
plemental Decision, if appropriate
On October 8, 1986 after the record was re-
opened and a supplemental hearing was held, the
Regional Director issued the attached Supplemen-
tal Decision and Order in which he dismissed the
instant petition The Regional Director found that
paragraph 17 of the contract in effect between the
Employer and the School District granted the
School District sufficient control, which the
School District had exercised, over the Employer's
labor relations to make meaningful collective bar
gaining impossible under the test set forth in Res-
Care, supra
Thereafter, the Petitioner filed a timely request
for review of the Regional Director s Supplemental
Decision, which the Board granted by mailgram
order dated January 14, 1987
The National Labor Relations Board has delegat
ed its authority in this proceeding to a three-
member panel
The Board has reviewed the entire record in this
proceeding Contrary to the Regional Director, we
find that the Employer retains sufficient control
over the employment conditions of its employees
to engage in meaningful collective bargaining Ac
cordingly, we conclude that it will effectuate the
purposes and policies of the Act to assert junsdic
tion over the Employer
Briefly, the evidence establishes that the Em
ployer and the School District entered into a con
tract on February 12, 1986, 1 whereby the Employ
er would provide transportation services for three
successive school years This agreement followed
the School District's acceptance of a bid that the
Employer had submitted Although the Employer
had calculated its bid by including, inter aim, the
cost of expected dnver rates, the bid submitted did
not delineate any wage rates Following acceptance
of the bid, the Employer s area general manager
did discuss the Employer's wage structure, bonus
payments, and safety program with the School Dis
tnct's transportation director The area general
manager testified that the transportation director
seemed "pleased ' The Employer alone, however,
determines the drivers' wages This determination
is usually made in the spring prior to the beginning
of the school year As the Employer makes this de-
termination for only the following school year, the
Employer's area general manager also testified that
the Employer had not calculated the wage rates for
the final 2 years of the 3 year contract (the 1987-
1988 and 1988-1989 school years)
Paragraph 17 of the contract between the Em
ployer and the School District states that the Em
ployer "shall not negotiate or enter into any agree
ment or arrangement with or on behalf of drivers
or other personnel without the written approval"
of the School District Pursuant to this paragraph
the Employer on August 29 submitted for the
School District s approval a list of drivers, copies
of the drivers physical examinations, pay schedules
for the 1986-1987 school year, and a copy of the
Employer s employee policy handbook When the
Employer began providing school bus transporta
tion services for the School District on September
2, the School District had not yet approved the
materials submitted by the Employer The School
District issued its approval on September 16
In Res-Care, supra, and Long Stretch Youth
Home, supra, the Board reaffirmed the test enunci
ated in National Transportation Service, 240 NLRB
'Au dates hereafter are in 1986
297 NLRB No 81
R W HARMON & SONS 563
565 (1979), for determining when assertion of juris-
diction over an employer providing services for or
to an exempt entity is appropriate The Board ex-
plained that the decision whether to assert jurisdic-
tion focuses on the extent of control retained by
the employer over essential terms and conditions of
employment as well as on the degree of control ex-
ercised by the exempt entity over the employer's
labor relations In essence, the Board will assert ju-
risdiction if the employer has the "final say on the
entire package of employee compensation, a e,
wages and fringe benefits " Res-Care, 280
NLRB at 674 An employer seeking to avoid the
Board's exercise of jurisdiction carnes the burden
of showing that it is not free to set the wages,
fringe benefits, and other terms and conditions of
employment for its employees Firefighters, 292
NLRB 1025, 1026 (1989) The Board declined to
assert jurisdiction over the employer in Res-Care
because the exempt entity retained the ultimate dis-
cretion over the basic economic terms Once the
exempt entity had contracted with the employer by
approving a proposal that specified wage levels
and fringe benefits, the employer could not alter
those wage levels and benefits without the exempt
entity's approval By contrast, the Board asserted
jurisdiction in Long Stretch because the exempt
entity did not dictate specific limits on expenditures
for erriployee compensation
We find that like the employer in Long Stretch
Youth Home, the Employer here has the "final say"
over the terms of compensation for its employees
Unlike the employer in Res-Care, the Employer
here has not submitted a bid that specifies wage
levels and benefits The contract between the Em-
ployer and the School Distnct neither specifies
wage levels to be paid by the Employer, nor pro-
hibits the 'Employer from altenng those levels once
they have been set Furthermore, the contractual
language does not state that the exempt entity has
the right to disapprove the pay schedules estab-
lished by the Employer Consequently, we find
that the contractual relationship between the Em-
ployer and the School District is similar to that be-
tween bus company employers and exempt entities
in other cases in which we have asserted jurisdic-
tion See, e g, Robinson Bus Service, 292 NLRB 70
(1988), Rustman Bus Go, 282 NLRB 152 (1986)
See also R W Harmon & Sons v NLRB, 664 F 2d
248, 251 (10th Cir 1981) ("Since [the employer]
controls wages and benefits—the bread and butter
issues of collective bargaining—it can engage in
meaningful bargaining) "
Nonetheless, the Regional Director and our dis-
senting colleague find that the Employer does not
retain the authonty to set employee compensation
because paragraph 17 of the contract grants the
School District the right to approve the Employ-
er's negotiation or entry into any agreement with
the drivers Thus, they conclude that as the Em-
ployer has submitted its pay schedules for approval
pursuant to this contractual clause, and as the
School District has exercised its contractual right
of approval, the Employer would be unable to
engage in meaningful bargaining with a labor orga-
nization over such economic terms We cannot
agree that this clause requires that the Board not
assert its jurisdiction over the Employer
Initially, we observe that Davis, the Employer's
general counsel for labor relations, testified that
paragraph 17 was included at the insistence of the
School District, which wanted the right to approve
drivers because of its concern with liability result-
ing from dnvers' negligence Thus, the approval
process is primarily designed to limit the School
District's potential liability from lawsuits, and not
to determine the level or content of compensation
paid to the employees See Long Stretch Youth
Home, 280 NLRB at 681 We further note that the
Employer did not submit the pay schedules until
after the contract was in operation and that the
School District did not issue its approval until after
the Employer began providing service Moreover,
there is no evidence that the School Distnct's
review and approval of the materials was anything
other than routine Accordingly, we find that the
approval process engaged in by the School District
does not constitute the type of control necessary to
establish that the Employer has relinquished the au-
thority to determine its employees' wages and
other terms of employment
We are also not convinced by our dissenting col-
league's argument that the Board should decline ju-
risdiction because paragraph 17 of the contract
grants the School District the right of approval
over any collective-bargaining agreement entered
into by the Employer Although the clause speaks
of a grant of approval for negotiating or entering
into an agreement, it does not expressly require ap-
proval of every term of the agreement In light of
the School District's reason for including para-
graph 17 in the contract, as well as the other fac-
tors discussed above indicating that the School
District's control does not extend to wages and
benefits, we cannot conclude that paragraph 17's
language mandates School District approval of all
terms of collective-bargaining agreements 2
2 In view of the foregoing, we find unconvincing our dissenting col-
league's reliance on Ohio Inns, 205 NLRB 528 (1973) In that case the
State actually exercised such extensive control over aspects of labor rela-
tions that the Board found It to be a joint employer with the employees
Continued
564 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
In sum, we find that the Employer has not met
its burden of showing that it is not free to set the
wages, benefits, and other terms and conditions of
employment for its employees We conclude that
the Employer therefore retains sufficient control
over the essential terms and conditions of employ-
ment of its employees to enable it to engage in
meaningful collective bargaining Accordingly, the
Regional Director's Supplemental Decision and
Order is reversed and we shall reinstate the peti-
tion and remand to the Regional Director for fur-
ther appropriate action
ORDER
The petition in Case 17-RC-9815 is reinstated
and remanded to the Regional Director for appro-
priate action
MEMBER DEVANEY, dissenting
Contrary to my colleagues, I would affirm the
Regional Director's Supplemental Decision and
Order because I believe that on the basis of the
record before us, it will not effectuate the purposes
and policies of the Act to assert jurisdiction over
this Employer In Res-Care, Inc , 280 NLRB 670,
674 (1986), the Board stated that "if an employer
does not have the final say on the entire package of
employee compensation, i e, wages and fringe ben-
efits, meaningful bargaining is not possible [foot-
note omitted] " Paragraph 17 of the contract be-
tween the Employer and the exempt governmental
entity, the School District, states that the Employ-
er "shall not negotiate or enter into any agreement
or arrangement with or on behalf of drivers or
other personnel without the written approval or
the School District Pursuant to this contractual
provision, the Employer submitted for the School
District's approval the drivers' pay schedules for
the then forthcoming school year The School Dis-
trict thereafter issued its wntten approval
In my view, an employer's payment of wages to
employees in exchange for their services constitutes
an agreement with its employees Thus, paragraph
17 of the contract required the Employer's submis-
sion of the pay scales to the School District
Indeed, if the Employer had not complied with this
requirement, paragraph 17 further provides that the
School District would be authorized to terminate
the contract I also note that the School District
exercised its contractual rights by issuing the writ-
ten approval In light of this evidence, and in the
absence of countervailing evidence establishing that
Immediate employer, and the Board relied not only on contract language,
but also on evidence at the hearing (not fully described) regarding a re-
quirement that collective-bargaining agreements had to be approved by
the State before they could become effective Id at 528-529
the School District does not retain the authority to
approve the drivers' wages in practice,' I agree
with the Regional Director that the Employer does
not have the final say on the entire package of its
employees' compensation Although my colleagues
find that the contractual relationship between the
Employer and the School District is similar to that
between school bus companies and exempt entities
in other cases in which the Board has asserted ju-
risdiction, those cases did not involve an exempt
entity's right to approve the employees' wages
Furthermore, my colleagues' reliance on the ab-
sence of evidence that the School District's approv-
al was not routine does not aid their case The Em-
ployer has met its burden of establishing that it
does not retain the ultimate discretion over the
payment of wages by showing that the contract re-
quired it to submit the pay scales for approval and
that the exempt entity exercised that right of ap-
proval The Union could have rebutted this show-
ing by introducing evidence indicating that the ap-
proval process was routine or a sham As noted
above, however, no such countervailing evidence
was presented
Furthermore, I find that the above-quoted lan-
guage of paragraph 17 on its face necessarily re-
quires that any negotiation of or entering into a
collective-bargaining agreement by the Employer
concerning its drivers be subject to the School Dis-
trict's written approval When a governmental
entity exempt from the Board's jurisdiction has the
right of disapproval over a collective-bargaining
agreement entered into by an employer, the Board
will not assert its junsdiction over that employer
See Ohio Inns, 205 NLRB 528 (1973), Res-Care,
Inc. 280 NLRB at 674 fn 22 As the Board stated in
Ohio Inns, 205 NLRB at 529 fn 3
When parties are subject to our junsdiction,
certain rights and obligations attach, and we
must have the authority to enforce those rights
and obligations For example, when parties ne-
gotiate to the point of agreement, we have the
authority to require that they reduce their
agreement to writing, execute it, and thence-
forward implement it But when, as here, the
State of Ohio has the power to disapprove of
any collective agreement, any attempt on our
part to enforce our law, in the event of such a
disapproval, would create an irresolvable con-
frontation between Federal and state authority
'1 find that the evidence indicating that the School District did not
issue its wntten approval until approximately 2 weeks after the Employ-
er's drivers began transporting the school children is insufficient to estab-
lish that the School District does not possess actual authority to disap-
prove the drivers wage schedules
R W HARMON & SONS 565
I find that the Board's reasoning in Ohio Inns fully
applies here Therefore, as the School District has
the power to disapprove of any negotiations or
agreement entered into by the Employer with or
on behalf of its employees, I conclude that it would
not effectuate the purpose and policies of the Act
to assert jurisdiction herein Accordingly, I would
affirm the Regional Director's Supplemental Deci.
sion and Order and dismiss the petition
SUPPLEMENTAL DECISION AND ORDER
Upon a petition duly filed under Section 9(c) of the
National Labor Relations Act, as amended, a supplemen-
tal hearing was held before a hearing officer of the Na-
tional Labor Relations Board
Pursuant to the provisions of Section 3(b) of the Act,
the Board has delegated its authority in this proceeding
to the [Regional Director for Region 17]
Upon the entire record in this proceeding, the under-
signed finds
1 The hearing officer's rulings made at the hearing are
free from prejudicial error and are hereby affirmed
2 The Employer is engaged in commerce within the
meaning of the Act
3 The labor organization involved claims to represent
certain employees of the Employer
4 No question affecting commerce exists concerning
the representation of certain employees of the Employer
within the meaning of Section 9(c)(1) and Section 2(6)
and (7) of the Act, for the following reasons
On April 30, 1986, a Decision and Direction of Elec-
tion issued in the above-captioned case, following a hear-
ing held on April 3, 1986 The issue in that hearing was
whether the Board should assert jurisdiction over the in-
stant Employer when considering the then pending con-
tract between the Employer and the School District of
the City of Independence, Missouri, a political subdivi-
sion of the State of Missouri exempt from the Board's ju-
risdiction While recognizing that this pending contract
appeared to grant the School District "control of mean-
ingful elements underlying collective bargaining," the
Regional Director concluded that the Employer current-
ly controlled most terms and conditions of employment
and that any exercise of control by tthe School District
was "a matter of speculation" Accordingly, the Region-
al Director found that the Board should assert jurisdic-
tion over the Employer and directed an election
On May 30, 1986, the Board granted the Employer's
Request for Review of the Regional Director's Decision
and Direction of Election On June 30, 1986, the Board
remanded the case for further consideration of jurisdic-
tional issue consistent with Long Stretch Youth Home,
Inc , 280 NLRB 678 (1986), and Res-Care, Inc , 280
NLRB 670 (1986) On July 24, 1986, the Regional Direc-
tor issued an Order to Show Cause why the record in
the case should be reopened and/or why the Regional
Director should not issue a Supplemental Decision in
due course Thereafter, the record reopened and a hear-
ing was held on September 22, 1986
On February 12, 1986, the Employer contracted with
the School District to provide school bus transportation
services for three successive school years, beginning with
the 1986-1987 school year This contract is now in oper-
ation Pursuant to paragraph 17 of this contract, the Em-
ployer submitted to the School District by a letter dated
August 29, 1986, a list of drivers, copies of physical ex-
aminations of these drivers, pay schedules for the 1986-
1987 school year and a copy of the Employer's employee
policy handbook for approval by the School District
The School District Issued its approval on September 16,
1986 The Employer began providing school bus trans-
portation services to the School District on September 2,
1986 The School District is requiring the Employer to
update the list of drivers with supporting information on
a monthly basis The record discloses that the School
District did not reject any drivers submitted for approv-
al, did not request further information on any drivers,
and did not seek to change any pay rates or personnel
policies for the drivers There was discussion between
the Employer and the School District concerning pay
rates and personnel policies prior to the time the Em-
ployer submitted them for approval
The amount of compensation for the Employer's driv-
ers is included in a base bid amount which reflects type
of bus and route Wages are not delineated in this bid
and the bid computation includes such things as route
mileage, expected driver rates, number of hours per day
the driver and bus are out, and the age of the equipment
required The School District awarded its contract for
the current school year as well as the school years 1987-
1988 and 1988-1989 based on bid amounts of each year
The Employer has not yet calculated its wages for the
final two years of the contract The Employer normally
announces its wages for the upcoming school year in the
spring of the year, specifically the last school month of
the current year The Employer considers the actual op-
erating costs of the buses including miles traveled, hours
out per day, drivers' wages, maintenance costs and acci-
dent rates There is evidence the Employer discussed
with the School District the plans of the Employer to
change certain wage structures and institute a bonus
plan
In Res-Care, Inc. supra, and Long Stretch Youth Home,
Inc. supra, the Board reaffirmed the basic test for deter-
mining whether to assert jurisdiction over an employer
providing services to or for an exempt entity as set forth
in National Transportation Service, 240 NLRB 565 (1979)
Thus, the Board seeks to determine whether the employ-
er has retained sufficient control over the employment
conditions of its employees to engage in effective or
meaningful bargaining with a labor organization In Res-
Care, the Board explained that the determination of as to
whether effective or meaningful bargaining with a labor
organization can take place should be based on an analy-
sis of the degree of control exercised by the exempt
entity over the employer's labor relations, as well as the
control retained by the employer Thus, if an employer
does not have the final say on the entire package of em-
ployee compensation, i e, wages and fringe benefits,
meaningful bargaining is not possible Res-Care, supra at
674 Here, article 17 of the contract between the Em-
ployer and the School District specifically provides that
e
566 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the Employer "shall not negotiate or enter into any
agreement or arrange with or on behalf of the drivers
• . . without wirtten approval" of the School District
This article further provides for the right of approval by
the School District of "the employment of any driver"
together with the right "to direct the removal of any
driver." Pursuant to this article, the Employer sought
and received from the School District approval of its
drivers, its wage schedule for the upcoming year, and its
personnel policies. In these circumstances, the School
District has retained, as well as exercised, sufficient con-
trol over the Employer's labor relations to make mean-
ingful bargaining not possible under the Res-Care test.
Accordingly, the instant petition is hereby dismissed.
ORDER
IT IS HEREBY ORDERED that the petition filed herein
be, and it hereby is, dismissed.